No reforms, no lasting solution, Merkel warned

In a speech at the Deutsche Boerse AG New Year’s reception, German Chancellor Angela Merkel stressed the euro area governments’ commitment to reforms will remain far more important than the very awaitedbond-purchase program about to be started by the ECB and the likely victory of the leftist so-called anti-euro party Syriza in the early elections in Greece. “It has to be prevented that actions of the European Central Bank seem in any way to push what has to be done in the area of fiscal policy and competitiveness into the background,” Merkel said.

A Quantitative Easing (QE), whatever its extent, will not solve the competitiveness and political issues that major European economies like France and Italy are still facing. “It can happen very quickly that the view takes hold that one replaces the other (speaking about the ECB move and what needs to be done) and that certainly won’t work,” Merkel said. “I’m responsible for the political arena and the pressure to improve competitiveness must be upheld, otherwise nothing at all will help us (…) and I will continue to stand for this,” the Chancellor added. Summing up, there is no expedient but strong political commitment to structural reforms.